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HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the “Company”)
today reported a second quarter net loss attributable to HollyFrontier
stockholders of $(409.4) million or $(2.33) per diluted share for the
quarter ended June 30, 2016, compared to net income attributable to
HollyFrontier stockholders of $360.8 million or $1.88 per diluted share
for the quarter ended June 30, 2015. Included in the current quarter
results were non-cash items consisting of goodwill and long-lived asset
impairment charges, offset by an inventory reserve adjustment. These
non-cash items include $309.3 million of goodwill and $344.8 million of
long-lived asset write-downs related to our Cheyenne Refinery, offset by
a $138.5 million benefit attributable to the change in our lower of cost
or market reserve. Excluding these non-cash items, adjusted net income
attributable to HollyFrontier stockholders for second quarter of 2016
was $49.0 million, or $0.28 per share. A reconciliation of actual to
adjusted amounts are shown in the accompanying reconciliations to
amounts reported under Generally Accepted Accounting Principles tables.

HollyFrontier also announced today that its Board of Directors declared
a regular quarterly dividend of $0.33 per share. This dividend will be
paid on September 23, 2016 to holders of record of common stock on
August 23, 2016.

For the second quarter, net income attributable to our stockholders,
exclusive of impairment and lower of cost or market inventory valuation
adjustments and related tax effects, decreased by $224.0 million
compared to the same period of 2015, principally reflecting lower
refining margins. Production levels averaged approximately 443,000
barrels per day ("BPD") and crude oil charges averaged 429,000 BPD for
the current quarter. On a per barrel basis, consolidated refinery gross
margin was $8.88 per produced barrel, a 49% decrease compared to $17.42
for the second quarter of 2015. Total operating expenses for the quarter
were $251.3 million compared to $246.2 million for the second quarter of
last year, and refining operating expenses averaged $5.51 per produced
barrel sold compared to $5.14 per barrel for the same period of 2015.

HollyFrontier’s President & CEO, George Damiris, commented, “we incurred
$57.0 million in costs during the second quarter associated with
purchasing Renewable Identification Numbers ("RINs") to comply with the
EPA’s Renewable Fuel Standard program. Along with others in our industry
and our trade association, AFPM, we are advocating for the EPA to level
the playing field by moving the point of obligation to include currently
exempt parties who, unlike merchant refiners, control blending and can
therefore increase biofuel usage in keeping with the intent of the RFS
program. The current misalignment in the point of obligation also
unfairly allows exempt blenders to extract unintended windfall profits
from the sale of RINs to obligated refiners as well as speculators who
contribute to RIN prices far exceeding the cost of blending."

"Second quarter earnings were impacted by weak benchmark refining
margins, falling secondary product margins and increasing costs
associated with the RFS mandate," Damiris said. "Despite strong demand
fundamentals, summer gasoline margins have been disappointing due to
supply outpacing demand. The combination of higher industry throughputs,
a 2% increase in gasoline yield across the U.S. refining system, and
rising imports have driven gasoline inventories 11% above last year. We
are focused on things we can control; running our refineries safely and
reliably and reining in operating and capital spending. Overall,
HollyFrontier is well positioned to withstand the current operating
environment and exploit potential opportunities given our complex
refineries in advantaged markets, strong balance sheet, and excellent
liquidity position.”

For the second quarter of 2016, net cash provided by operations totaled
$303.7 million. During the period , we declared a dividend of $0.33 per
share to shareholders totaling $58.2 million. At June 30, 2016, our
combined balance of cash and short-term investments totaled $533.3
million and our consolidated debt was $1,678.1 million. Our debt,
exclusive of Holly Energy Partners' debt, which is nonrecourse to
HollyFrontier, was $595.0 million at June 30, 2016.

The Company has scheduled a webcast conference call for today, August 3,
2016, at 8:30 AM Eastern Time to discuss second quarter financial
results. This webcast may be accessed at: https://event.webcasts.com/starthere.jsp?ei=1109619.
An audio archive of this webcast will be available using the above noted
link through August 17, 2016.

HollyFrontier Corporation, headquartered in Dallas, Texas, is an
independent petroleum refiner and marketer that produces high-value
light products such as gasoline, diesel fuel, jet fuel and other
specialty products. HollyFrontier operates through its subsidiaries a
135,000 barrels per stream day (“BPSD”) refinery located in El Dorado,
Kansas, two refinery facilities with a combined capacity of 125,000 BPSD
located in Tulsa, Oklahoma, a 100,000 BPSD refinery located in Artesia,
New Mexico, a 52,000 BPSD refinery located in Cheyenne, Wyoming and a
45,000 BPSD refinery in Woods Cross, Utah. HollyFrontier markets its
refined products principally in the Southwest U.S., the Rocky Mountains
extending into the Pacific Northwest and in other neighboring Plains
states. A subsidiary of HollyFrontier also owns a 39% interest
(including the general partner interest) in Holly Energy Partners, L.P.

The following is a “safe harbor” statement under the Private Securities
Litigation Reform Act of 1995: The statements in this press release
relating to matters that are not historical facts are “forward-looking
statements” based on management’s beliefs and assumptions using
currently available information and expectations as of the date hereof,
are not guarantees of future performance and involve certain risks and
uncertainties, including those contained in our filings with the
Securities and Exchange Commission. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that our expectations will prove
correct. Therefore, actual outcomes and results could materially differ
from what is expressed, implied or forecast in such statements. Any
differences could be caused by a number of factors, including, but not
limited to, risks and uncertainties with respect to the actions of
actual or potential competitive suppliers of refined petroleum products
in the Company’s markets, the demand for and supply of crude oil and
refined products, the spread between market prices for refined products
and market prices for crude oil, the possibility of constraints on the
transportation of refined products, the possibility of inefficiencies,
curtailments or shutdowns in refinery operations or pipelines, effects
of governmental and environmental regulations and policies, the
availability and cost of financing to the Company, the effectiveness of
the Company’s capital investments and marketing strategies, the
Company’s efficiency in carrying out construction projects, the ability
of the Company to acquire refined product operations or pipeline and
terminal operations on acceptable terms and to integrate any future
acquired operations, the possibility of terrorist attacks and the
consequences of any such attacks, general economic conditions and other
financial, operational and legal risks and uncertainties detailed from
time to time in the Company’s Securities and Exchange Commission
filings. The forward-looking statements speak only as of the date made
and, other than as required by law, we undertake no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.

RESULTS OF OPERATIONS

Financial Data (all information in this release is unaudited)

Three Months EndedJune 30,

Change from 2015

2016

2015

Change

Percent

(In thousands, except per share data)

Sales and other revenues

$

2,714,638

$

3,701,912

$

(987,274

)

(27

)%

Operating costs and expenses:

Cost of products sold:

Cost of products sold (exclusive of lower of cost or market
inventory valuation adjustment)

2,248,155

2,887,475

(639,320

)

(22

)

Lower of cost or market inventory valuation adjustment

(138,473

)

(135,480

)

(2,993

)

2

2,109,682

2,751,995

(642,313

)

(23

)

Operating expenses

251,336

246,165

5,171

2

General and administrative expenses

29,655

26,117

3,538

14

Depreciation and amortization

90,423

87,803

2,620

3

Goodwill and asset impairment

654,084

—

654,084

—

Total operating costs and expenses

3,135,180

3,112,080

23,100

1

Income (loss) from operations

(420,542

)

589,832

(1,010,374

)

(171

)

Other income (expense):

Earnings of equity method investments

3,623

631

2,992

474

Interest income

527

768

(241

)

(31

)

Interest expense

(14,251

)

(10,559

)

(3,692

)

35

Loss on early extinguishment of debt

—

(1,368

)

1,368

(100

)

Gain on sale of assets and other

128

873

(745

)

(85

)

(9,973

)

(9,655

)

(318

)

3

Income (loss) before income taxes

(430,515

)

580,177

(1,010,692

)

(174

)

Income tax expense (benefit)

(38,045

)

206,990

(245,035

)

(118

)

Net income (loss)

(392,470

)

373,187

(765,657

)

(205

)

Less net income attributable to noncontrolling interest

16,898

12,363

4,535

37

Net income (loss) attributable to HollyFrontier stockholders

$

(409,368

)

$

360,824

$

(770,192

)

(213

)%

Earnings (loss) per share attributable to HollyFrontier
stockholders:

Basic

$

(2.33

)

$

1.88

$

(4.21

)

(224

)%

Diluted

$

(2.33

)

$

1.88

$

(4.21

)

(224

)%

Cash dividends declared per common share

$

0.33

$

0.33

$

—

—

%

Average number of common shares outstanding:

Basic

175,865

191,355

(15,490

)

(8

)%

Diluted

175,865

191,454

(15,589

)

(8

)%

EBITDA

$

(343,266

)

$

666,776

$

(1,010,042

)

(151

)%

Six Months EndedJune 30,

Change from 2015

2016

2015

Change

Percent

(In thousands, except per share data)

Sales and other revenues

$

4,733,362

$

6,708,538

$

(1,975,176

)

(29

)%

Operating costs and expenses:

Cost of products sold:

Cost of products sold (exclusive of lower of cost or market
inventory valuation adjustment)

3,873,318

5,138,848

(1,265,530

)

(25

)

Lower of cost or market inventory valuation adjustment

(194,594

)

(142,026

)

(52,568

)

37

3,678,724

4,996,822

(1,318,098

)

(26

)

Operating expenses

503,919

509,761

(5,842

)

(1

)

General and administrative expenses

55,276

55,686

(410

)

(1

)

Depreciation and amortization

178,303

167,815

10,488

6

Goodwill and asset impairment

654,084

—

654,084

—

Total operating costs and expenses

5,070,306

5,730,084

(659,778

)

(12

)

Income (loss) from operations

(336,944

)

978,454

(1,315,398

)

(134

)

Other income (expense):

Earnings (loss) of equity method investments

6,388

(7,176

)

13,564

189

Interest income

602

1,730

(1,128

)

(65

)

Interest expense

(26,338

)

(20,713

)

(5,625

)

27

Loss on early extinguishment of debt

(8,718

)

(1,368

)

(7,350

)

537

Gain on sale of assets and other

193

1,639

(1,446

)

(88

)

(27,873

)

(25,888

)

(1,985

)

8

Income (loss) before income taxes

(364,817

)

952,566

(1,317,383

)

(138

)

Income tax expense (benefit)

(15,737

)

336,718

(352,455

)

(105

)

Net income (loss)

(349,080

)

615,848

(964,928

)

(157

)

Less net income attributable to noncontrolling interest

39,035

28,148

10,887

39

Net income (loss) attributable to HollyFrontier stockholders

$

(388,115

)

$

587,700

$

(975,815

)

(166

)%

Earnings (loss) per share attributable to HollyFrontier
stockholders:

Basic

$

(2.20

)

$

3.03

$

(5.23

)

(173

)%

Diluted

$

(2.20

)

$

3.03

$

(5.23

)

(173

)%

Cash dividends declared per common share

$

0.66

$

0.65

$

0.01

2

%

Average number of common shares outstanding:

Basic

176,301

193,202

(16,901

)

(9

)%

Diluted

176,301

193,279

(16,978

)

(9

)%

EBITDA

$

(191,095

)

$

1,112,584

$

(1,303,679

)

(117

)%

Balance Sheet Data

June 30,

December 31,

2016

2015

(In thousands)

Cash, cash equivalents and total investments in marketable securities

$

533,318

$

210,552

Working capital

$

1,069,544

$

587,450

Total assets

$

8,659,717

$

8,388,299

Long-term debt

$

1,678,123

$

1,040,040

Total equity

$

5,197,910

$

5,809,773

Segment Information

Our operations are organized into two reportable segments, Refining and
HEP. Our operations that are not included in the Refining and HEP
segments are included in Corporate and Other. Intersegment transactions
are eliminated in our consolidated financial statements and are included
in Consolidations and Eliminations. The Refining segment includes the
operations of our El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross
refineries and HFC Asphalt (aggregated as a reportable segment).
Refining activities involve the purchase and refining of crude oil and
wholesale and branded marketing of refined products, such as gasoline,
diesel fuel and jet fuel. These petroleum products are primarily
marketed in the Mid-Continent, Southwest and Rocky Mountain regions of
the United States. Additionally, the Refining segment includes specialty
lubricant products produced at our Tulsa refineries that are marketed
throughout North America and are distributed in Central and South
America. HFC Asphalt operates various asphalt terminals in Arizona, New
Mexico and Oklahoma.

The HEP segment involves all of the operations of HEP, a consolidated
variable interest entity, which owns and operates logistics assets
consisting of petroleum product and crude oil pipelines, terminals,
tankage, loading rack facilities and refinery process units in the
Mid-Continent, Southwest and Rocky Mountain regions of the United
States. The HEP segment also includes a 75% interest in the UNEV
Pipeline (an HEP consolidated subsidiary), a 50% ownership interest in
each of the Frontier Pipeline, Osage Pipeline and the Cheyenne Pipeline
and a 25% ownership interest in SLC Pipeline. Revenues from the HEP
segment are earned through transactions with unaffiliated parties for
pipeline transportation, rental and terminalling operations as well as
revenues relating to pipeline transportation services provided for our
refining operations. Due to certain basis differences, our reported
amounts for the HEP segment may not agree to amounts reported in HEP's
periodic public filings.

Refining

HEP

Corporate

and Other

Consolidations

and

Eliminations

Consolidated

Total

(In thousands)

Three Months Ended June 30, 2016

Sales and other revenues

$

2,699,022

$

94,896

$

47

$

(79,327

)

$

2,714,638

Depreciation and amortization

$

72,026

$

15,305

$

3,299

$

(207

)

$

90,423

Income (loss) from operations

$

(438,174

)

$

49,474

$

(31,197

)

$

(645

)

$

(420,542

)

Capital expenditures

$

124,282

$

14,794

$

1,396

$

—

$

140,472

Three Months Ended June 30, 2015

Sales and other revenues

$

3,686,493

$

83,479

$

151

$

(68,211

)

$

3,701,912

Depreciation and amortization

$

70,435

$

14,660

$

2,915

$

(207

)

$

87,803

Income (loss) from operations

$

576,313

$

40,834

$

(26,739

)

$

(576

)

$

589,832

Capital expenditures

$

121,600

$

18,116

$

4,578

$

—

$

144,294

Six Months Ended June 30, 2016

Sales and other revenues

$

4,698,609

$

196,906

$

157

$

(162,310

)

$

4,733,362

Depreciation and amortization

$

140,904

$

31,334

$

6,479

$

(414

)

$

178,303

Income (loss) from operations

$

(383,174

)

$

105,541

$

(58,052

)

$

(1,259

)

$

(336,944

)

Capital expenditures

$

253,300

$

32,667

$

4,078

$

—

$

290,045

Six Months Ended June 30, 2015

Sales and other revenues

$

6,675,773

$

173,235

$

369

$

(140,839

)

$

6,708,538

Depreciation and amortization

$

133,710

$

28,950

$

5,569

$

(414

)

$

167,815

Income (loss) from operations

$

950,214

$

85,044

$

(55,688

)

$

(1,116

)

$

978,454

Capital expenditures

$

238,067

$

69,843

$

9,003

$

—

$

316,913

June 30, 2016

Cash, cash equivalents and total investments in marketable securities

$

800

$

4,882

$

527,636

$

—

$

533,318

Total assets

$

6,627,438

$

1,652,772

$

682,211

$

(302,704

)

$

8,659,717

Long-term debt

$

—

$

1,083,136

$

594,987

$

—

$

1,678,123

December 31, 2015

Cash, cash equivalents and total investments in marketable securities

$

91

$

15,013

$

195,448

$

—

$

210,552

Total assets

$

6,831,235

$

1,578,399

$

289,225

$

(310,560

)

$

8,388,299

Long-term debt

$

—

$

1,008,752

$

31,288

$

—

$

1,040,040

Refining Operating Data

The following tables set forth information, including non-GAAP
performance measures about our refinery operations. The cost of products
and refinery gross and net operating margins do not include the non-cash
effects of lower of cost or market inventory valuation adjustments and
depreciation and amortization. Reconciliations to amounts reported under
GAAP are provided under “Reconciliations to Amounts Reported Under
Generally Accepted Accounting Principles” below.

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

Mid-Continent Region (El Dorado and Tulsa Refineries)

Crude charge (BPD) (1)

270,590

279,940

252,070

269,010

Refinery throughput (BPD) (2)

292,320

294,600

272,240

281,940

Refinery production (BPD) (3)

280,590

283,120

261,340

271,240

Sales of produced refined products (BPD)

264,660

271,860

249,010

264,130

Sales of refined products (BPD) (4)

285,780

292,790

274,000

280,140

Refinery utilization (5)

104.1

%

107.7

%

97.0

%

103.5

%

Average per produced barrel (6)

Net sales

$

60.24

$

79.95

$

53.89

$

75.96

Cost of products (7)

52.55

64.60

46.13

59.70

Refinery gross margin (8)

7.69

15.35

7.76

16.26

Refinery operating expenses (9)

4.56

4.35

4.95

4.62

Net operating margin (8)

$

3.13

$

11.00

$

2.81

$

11.64

Refinery operating expenses per throughput barrel (10)

$

4.13

$

4.01

$

4.53

$

4.33

Feedstocks:

Sweet crude oil

58

%

59

%

55

%

60

%

Sour crude oil

17

%

20

%

19

%

20

%

Heavy sour crude oil

17

%

16

%

19

%

15

%

Other feedstocks and blends

8

%

5

%

7

%

5

%

Total

100

%

100

%

100

%

100

%

Sales of produced refined products:

Gasolines

47

%

48

%

48

%

48

%

Diesel fuels

35

%

36

%

35

%

35

%

Jet fuels

6

%

6

%

6

%

7

%

Fuel oil

1

%

1

%

1

%

1

%

Asphalt

3

%

2

%

2

%

2

%

Lubricants

5

%

4

%

5

%

4

%

LPG and other

3

%

3

%

3

%

3

%

Total

100

%

100

%

100

%

100

%

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

Southwest Region (Navajo Refinery)

Crude charge (BPD) (1)

101,660

104,050

99,890

97,660

Refinery throughput (BPD) (2)

111,610

114,630

110,370

109,370

Refinery production (BPD) (3)

110,520

113,320

109,020

107,640

Sales of produced refined products (BPD)

110,360

116,710

111,870

111,450

Sales of refined products (BPD) (4)

111,570

124,710

112,660

121,420

Refinery utilization (5)

101.7

%

104.1

%

99.9

%

97.7

%

Average per produced barrel (6)

Net sales

$

61.86

$

80.78

$

53.67

$

74.31

Cost of products (7)

50.71

60.32

44.66

55.87

Refinery gross margin (8)

11.15

20.46

9.01

18.44

Refinery operating expenses (9)

4.77

3.99

4.50

4.68

Net operating margin (8)

$

6.38

$

16.47

$

4.51

$

13.76

Refinery operating expenses per throughput barrel (10)

$

4.72

$

4.06

$

4.56

$

4.77

Feedstocks:

Sweet crude oil

27

%

33

%

30

%

31

%

Sour crude oil

64

%

58

%

60

%

58

%

Other feedstocks and blends

9

%

9

%

10

%

11

%

Total

100

%

100

%

100

%

100

%

Sales of produced refined products:

Gasolines

54

%

54

%

55

%

55

%

Diesel fuels

41

%

39

%

40

%

38

%

Fuel oil

2

%

3

%

2

%

2

%

Asphalt

1

%

1

%

1

%

1

%

LPG and other

2

%

3

%

2

%

4

%

Total

100

%

100

%

100

%

100

%

Rocky Mountain Region (Cheyenne and Woods Cross Refineries)

Crude charge (BPD) (1)

56,340

62,110

57,880

64,770

Refinery throughput (BPD) (2)

54,680

67,320

61,950

70,790

Refinery production (BPD) (3)

51,550

63,070

58,900

66,550

Sales of produced refined products (BPD)

56,090

59,100

61,370

62,620

Sales of refined products (BPD) (4)

61,950

64,800

65,960

68,450

Refinery utilization (5)

67.9

%

74.8

%

69.7

%

78.0

%

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

Rocky Mountain Region (Cheyenne and Woods Cross Refineries)

Average per produced barrel (6)

Net sales

$

62.26

$

81.84

$

53.86

$

73.33

Cost of products (7)

52.22

60.88

45.04

55.28

Refinery gross margin (8)

10.04

20.96

8.82

18.05

Refinery operating expenses (9)

11.48

11.02

10.51

10.61

Net operating margin (8)

$

(1.44

)

$

9.94

$

(1.69

)

$

7.44

Refinery operating expenses per throughput barrel (10)

$

11.78

$

9.67

$

10.41

$

9.39

Feedstocks:

Sweet crude oil

45

%

42

%

42

%

41

%

Heavy sour crude oil

35

%

38

%

34

%

38

%

Black wax crude oil

20

%

12

%

17

%

12

%

Other feedstocks and blends

—

%

8

%

7

%

9

%

Total

100

%

100

%

100

%

100

%

Sales of produced refined products:

Gasolines

58

%

56

%

60

%

57

%

Diesel fuels

36

%

38

%

34

%

37

%

Fuel oil

1

%

2

%

2

%

2

%

Asphalt

1

%

2

%

1

%

2

%

LPG and other

4

%

2

%

3

%

2

%

Total

100

%

100

%

100

%

100

%

Consolidated

Crude charge (BPD) (1)

428,590

446,100

409,840

431,440

Refinery throughput (BPD) (2)

458,610

476,550

444,560

462,100

Refinery production (BPD) (3)

442,660

459,510

429,260

445,430

Sales of produced refined products (BPD)

431,110

447,670

422,250

438,200

Sales of refined products (BPD) (4)

459,300

482,300

452,620

470,010

Refinery utilization (5)

96.7

%

100.7

%

92.5

%

97.4

%

Average per produced barrel (6)

Net sales

$

60.92

$

80.41

$

53.83

$

75.16

Cost of products (7)

52.04

62.99

45.58

58.09

Refinery gross margin (8)

8.88

17.42

8.25

17.07

Refinery operating expenses (9)

5.51

5.14

5.64

5.49

Net operating margin (8)

$

3.37

$

12.28

$

2.61

$

11.58

Refinery operating expenses per throughput barrel (10)

$

5.18

$

4.83

$

5.35

$

5.21

Feedstocks:

Sweet crude oil

49

%

50

%

47

%

50

%

Sour crude oil

27

%

27

%

27

%

26

%

Heavy sour crude oil

15

%

15

%

16

%

15

%

Black wax crude oil

2

%

2

%

2

%

2

%

Other feedstocks and blends

7

%

6

%

8

%

7

%

Total

100

%

100

%

100

%

100

%

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

Consolidated

Sales of produced refined products:

Gasolines

50

%

51

%

51

%

51

%

Diesel fuels

37

%

37

%

36

%

36

%

Jet fuels

4

%

4

%

4

%

4

%

Fuel oil

1

%

1

%

1

%

1

%

Asphalt

2

%

2

%

2

%

2

%

Lubricants

3

%

2

%

3

%

3

%

LPG and other

3

%

3

%

3

%

3

%

Total

100

%

100

%

100

%

100

%

(1)

Crude charge represents the barrels per day of crude oil processed
at our refineries.

(2)

Refinery throughput represents the barrels per day of crude and
other refinery feedstocks input to the crude units and other
conversion units at our refineries.

(3)

Refinery production represents the barrels per day of refined
products yielded from processing crude and other refinery feedstocks
through the crude units and other conversion units at our refineries.

Represents average per barrel amount for produced refined products
sold, which is a non-GAAP measure. Reconciliations to amounts
reported under GAAP are provided under “Reconciliations to Amounts
Reported Under Generally Accepted Accounting Principles” below.

(7)

Transportation, terminal and refinery storage costs billed from HEP
are included in cost of products.

(8)

Excludes lower of cost or market inventory valuation adjustments of
$138.5 million and $135.5 million for the three months ended June
30, 2016 and 2015, respectively, and $194.6 million and $142.0
million for the six months ended June 30, 2016 and 2015,
respectively.

Earnings before interest, taxes, depreciation and amortization, which we
refer to as EBITDA, is calculated as net income (loss) attributable to
HollyFrontier stockholders plus (i) interest expense, net of interest
income, (ii) income tax provision, and (iii) depreciation and
amortization. EBITDA is not a calculation provided for under accounting
principles generally accepted in the United States; however, the amounts
included in the EBITDA calculation are derived from amounts included in
our consolidated financial statements. EBITDA should not be considered
as an alternative to net income or operating income as an indication of
our operating performance or as an alternative to operating cash flow as
a measure of liquidity. EBITDA is not necessarily comparable to
similarly titled measures of other companies. EBITDA is presented here
because it is a widely used financial indicator used by investors and
analysts to measure performance. EBITDA is also used by our management
for internal analysis and as a basis for financial covenants.

Set forth below is our calculation of EBITDA.

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

(In thousands)

Net income (loss) attributable to HollyFrontier stockholders

$

(409,368

)

$

360,824

$

(388,115

)

$

587,700

Add income tax provision

(38,045

)

206,990

(15,737

)

336,718

Add interest expense (1)

14,251

11,927

35,056

22,081

Subtract interest income

(527

)

(768

)

(602

)

(1,730

)

Add depreciation and amortization

90,423

87,803

178,303

167,815

EBITDA

$

(343,266

)

$

666,776

$

(191,095

)

$

1,112,584

(1) Includes loss on early extinguishment of debt of $1.4 million
for the three months ended June 30, 2015 and $8.7 million and $1.4
million for the six months ended June 30, 2016 and 2015,
respectively.

Refinery gross margin and net operating margin are non-GAAP performance
measures that are used by our management and others to compare our
refining performance to that of other companies in our industry. We
believe these margin measures are helpful to investors in evaluating our
refining performance on a relative and absolute basis.

Refinery gross margin per barrel is the difference between average net
sales price and average cost of products per barrel of produced refined
products. Net operating margin per barrel is the difference between
refinery gross margin and refinery operating expenses per barrel of
produced refined products. These two margins do not include the non-cash
effects of lower of cost or market inventory valuation adjustments,
depreciation and amortization or goodwill and asset impairment charges.
Each of these component performance measures can be reconciled directly
to our consolidated statements of income.

Other companies in our industry may not calculate these performance
measures in the same manner.

Refinery Gross and Net Operating Margins

Below are reconciliations to our consolidated statements of income for
(i) net sales, cost of products sold (exclusive of lower of cost or
market inventory valuation adjustment) and operating expenses, in each
case averaged per produced barrel sold, and (ii) net operating margin
and refinery gross margin. Due to rounding of reported numbers, some
amounts may not calculate exactly.

Reconciliation of produced refined product sales
to total sales and other revenues

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

(Dollars in thousands, except per barrel amounts)

Consolidated

Average sales price per produced barrel sold

$

60.92

$

80.41

$

53.83

$

75.16

Times sales of produced refined products (BPD)

431,110

447,670

422,250

438,200

Times number of days in period

91

91

182

181

Produced refined product sales

$

2,389,953

$

3,275,740

$

4,136,809

$

5,961,255

Total produced refined product sales

$

2,389,953

$

3,275,740

$

4,136,809

$

5,961,255

Add refined product sales from purchased products and rounding (1)

161,860

259,030

293,460

426,330

Total refined product sales

2,551,813

3,534,770

4,430,269

6,387,585

Add direct sales of excess crude oil (2)

100,782

92,659

191,700

192,928

Add other refining segment revenue (3)

46,427

59,064

76,640

95,260

Total refining segment revenue

2,699,022

3,686,493

4,698,609

6,675,773

Add HEP segment sales and other revenues

94,896

83,479

196,906

173,235

Add corporate and other revenues

47

151

157

369

Subtract consolidations and eliminations

(79,327

)

(68,211

)

(162,310

)

(140,839

)

Sales and other revenues

$

2,714,638

$

3,701,912

$

4,733,362

$

6,708,538

Reconciliation of average cost of products per
produced barrel sold to cost of products sold (exclusive of lower of
cost or market inventory valuation adjustment)

Costs of products sold (exclusive of lower of cost or market
inventory valuation adjustment and depreciation and amortization)

$

2,248,155

$

2,887,475

$

3,873,318

$

5,138,848

Reconciliation of average refinery operating
expenses per produced barrel sold to total operating expenses

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

(Dollars in thousands, except per barrel amounts)

Consolidated

Average refinery operating expenses per produced barrel sold

$

5.51

$

5.14

$

5.64

$

5.49

Times sales of produced refined products (BPD)

431,110

447,670

422,250

438,200

Times number of days in period

91

91

182

181

Refinery operating expenses for produced products sold

$

216,163

$

209,393

$

433,431

$

435,435

Total refinery operating expenses for produced products sold

$

216,163

$

209,393

$

433,431

$

435,435

Add other refining segment operating expenses and rounding(5)

11,477

10,843

22,971

20,570

Total refining segment operating expenses

227,640

220,236

456,402

456,005

Add HEP segment operating expenses

27,255

25,289

54,078

53,255

Add corporate and other costs

1,152

554

2,407

788

Subtract consolidations and eliminations

(4,711

)

86

(8,968

)

(287

)

Operating expenses (exclusive of depreciation and amortization)

$

251,336

$

246,165

$

503,919

$

509,761

Reconciliation of net operating margin per barrel
to refinery gross margin per barrel to total sales and other revenues

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

(Dollars in thousands, except per barrel amounts)

Consolidated

Net operating margin per barrel

$

3.37

$

12.28

$

2.61

$

11.58

Add average refinery operating expenses per produced barrel

5.51

5.14

5.64

5.49

Refinery gross margin per barrel

8.88

17.42

8.25

17.07

Add average cost of products per produced barrel sold

52.04

62.99

45.58

58.09

Average sales price per produced barrel sold

$

60.92

$

80.41

$

53.83

$

75.16

Times sales of produced refined products (BPD)

431,110

447,670

422,250

438,200

Times number of days in period

91

91

182

181

Produced refined product sales

$

2,389,953

$

3,275,740

$

4,136,809

$

5,961,255

Total produced refined product sales

$

2,389,953

$

3,275,740

$

4,136,809

$

5,961,255

Add refined product sales from purchased products and rounding (1)

161,860

259,030

293,460

426,330

Total refined product sales

2,551,813

3,534,770

4,430,269

6,387,585

Add direct sales of excess crude oil (2)

100,782

92,659

191,700

192,928

Add other refining segment revenue (3)

46,427

59,064

76,640

95,260

Total refining segment revenue

2,699,022

3,686,493

4,698,609

6,675,773

Add HEP segment sales and other revenues

94,896

83,479

196,906

173,235

Add corporate and other revenues

47

151

157

369

Subtract consolidations and eliminations

(79,327

)

(68,211

)

(162,310

)

(140,839

)

Sales and other revenues

$

2,714,638

$

3,701,912

$

4,733,362

$

6,708,538

(1)

We purchase finished products to facilitate delivery to certain
locations or to meet delivery commitments.

(2)

We purchase crude oil that at times exceeds the supply needs of our
refineries. Quantities in excess of our needs are sold at market
prices to purchasers of crude oil that are recorded on a gross basis
with the sales price recorded as revenues and the corresponding
acquisition cost as inventory and then upon sale as cost of products
sold. Additionally, at times we enter into buy/sell exchanges of
crude oil with certain parties to facilitate the delivery of
quantities to certain locations that are netted at cost.

(3)

Other refining segment revenue includes the incremental revenues
associated with HFC Asphalt, product purchased and sold forward for
profit as market conditions and available storage capacity allows
and miscellaneous revenue.

(4)

Other refining segment cost of products sold includes the
incremental cost of products for HFC Asphalt, the incremental cost
associated with storing product purchased and sold forward as market
conditions and available storage capacity allows and miscellaneous
costs.

(5)

Other refining segment operating expenses include the marketing
costs associated with our refining segment and the operating
expenses of HFC Asphalt.

Reconciliation of net income (loss) attributable
to HollyFrontier stockholders to adjusted net income attributable to
HollyFrontier stockholders

Adjusted net income attributable to HollyFrontier stockholders is a
non-GAAP financial measure that excludes non-cash lower of cost or
market inventory valuation adjustments and impairment charges. We
believe this measure is helpful to investors and others in evaluating
our financial performance and to compare our results to that of other
companies in our industry. Similarly titled performance measures of
other companies may not be calculated in the same manner.

GAAP requires that inventories by stated at the lower of cost or
market. We maintain an inventory valuation reserve, whereby
inventory costs in excess of market values are written down to
current replacement costs and charged to cost of products sold. The
valuation reserve is reassessed quarterly, at which time an
inventory valuation adjustment is recorded, as a new lower of cost
or market inventory valuation reserve is established. Such inventory
valuation adjustments result in non-cash charges or benefits.

(2)

Our goodwill is evaluated for impairment annually or when impairment
indicators occur. In the second quarter of 2016, we determined that
goodwill and long-lived assets of our Cheyenne Refinery had been
impaired and recorded related impairment charges of $309.3 million
and $344.8 million, respectively.